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Kmart Has Pressured Some Suppliers, Newspaper Reports

Kmart has been pressuring some of its suppliers to give it cash back and make other concessions to help its own bottom line, according to The New York Times.

October 24, 2001, 08:00 pm

NEW YORK - Kmart has been pressuring some of its suppliers to give it cash back and make other concessions to help its own bottom line, according to The New York Times.

More than half a dozen companies, including makers of packaged foods, jewelry and apparel, have voiced their complaints on the condition that they not be identified. The charges include delayed payments without any notice, being asked to give back money because their products did not produce the profits Kmart wanted, and being urged to cut prices to Kmart's food and beauty distribution partner, the Fleming Companies, or risk losing business.

Some manufacturers the newspaper spoke to countered that they have been paid on time and not asked to make special deals.

Kmart refused to discuss with The New York Times the terms of its contracts with suppliers, but a spokeswoman said Chief Executive Charles Conaway had long pledged to make the company more competitive, both on pricing and on the way it manages its accounts. "He has said that the company is woefully uncompetitive with respect to payables," said Lori McTavish, a company spokeswoman. "And he said the company is now aggressively pursuing terms to be competitive in the marketplace."

Fleming, one of Kmart's longtime distributors, began last month demanding a 3 percent discount on prices from companies that would in turn become "preferred vendors."

Fleming told the Times that it sees the move as advantageous to everyone. "Vendors benefit from our significant customer base and have opportunities to sell to many channels," said Meredith Anderson, director of investor relations at Fleming. "Ultimately, there is a value to this.